Comments Off on Fixed Fee vs Contingent Debt Collection

Fixed Fee letters are an inexpensive method of debt collection. Usually, the total cost of purchasing Fixed Fee Letters comes out to less than five percent for this service. In addition, collection ratios are usually over 40%. The service has some huge upside, but is isn’t for all clients in all situations.
 
The Fixed Fee Debt Collection service is built around carefully constructed letters designed to get clients paid without causing excessive friction between our clients and their customers. It works quite well, but only under specific situations.
 
Fixed Fee Debt Collection requires good addresses. If the letter doesn’t get to the debtor there is nothing else to fall back on. It needs bills that are relatively recent for the same reason. People move a lot, and in one year you can expect a large part of your consumers to leave the address they used when they incurred the bill. Businesses don’t move as often, but they die quickly. four out of five businesses close within 5 years and only one out of ten is still functioning after ten years. Older bills have more bad addresses so you collect less money.
 
A bad address, deceased patient or defunct business are a total waste of your expenses in Fixed Fee. This is what you need to do in order to decide if some or all of your debt collection claims should be turned over to Fixed Fee.
 
If you are uncertain of the debtor’s address, don’t use Fixed Fee Debt Collection for that debtor. This includes any bill over one year old. The best Fixed Fee results are for bills within ninety days past due because there has been less time for some of them to move. Phone numbers don’t matter because there will be no calls.
 
A simple rule of thumb is to use Fixed Fee if you are reasonably sure of a good address. It is inexpensive and effective. If a claim is not collected in Fixed Fee you can always move the claim to Contingent Debt Collection where it will be traced for current location.

Contingent Debt Collection is more expensive, but works with more tools. In Contingent, the debtors are called as frequently as possible, reported to Credit Bureaus and, if you wish, sued.
 
The bottom line is easy. If you have good addresses try Fixed Fee first and dramatically reduce your collection costs

ABOUT EXECUTIVE CREDIT MANAGEMENT, INC.

Executive Credit Management is a full-service Debt Collection and Applicant Screening agency with over 20 years experience located in Central New Jersey. We provide excellent service in the following areas: Employment ScreeningBusiness Screening, and Tenant Screening. Executive Credit Management belongs to a number of Skip Tracing databases and offers services to help locate and confirm the current address of missing debtors. Other services provided are: litigation evaluation on all lawsuit decisions, improvement of the quality of the applicant data, Lawsuit Monitoring, Handling of Debtor Disputes. Executive Credit Management features the best Call Monitoring System in the Debt Collection industry.